Time to Market for New Pharmaceuticals Increasing in Europe While Prices Continue Downward Pressure

As the debate over the impact of economic austerity on healthcare delivery continues to rage across Southern Europe, it perhaps comes as little surprise that the lowest prices for innovative pharmaceutical products can be found in one of the worst affected markets: Italy. What may be more surprising, however, is that the United Kingdom is not far behind Italy with the lowest prices. We discovered this during a small study we conducted on recently approved products in the top 5 European markets.

Long Pricing Procedures Lead to Fewer Innovative Drugs Across Top Markets
Among a sample of 125 innovative drugs approved by the European Medicines Agency (EMA) between August 2009 and April 2012, only 18 drugs (around 14% of the sample) have been launched in each of the markets studied. It should be highlighted that, despite the fact that the drugs Jevtana (cabazitaxel) and Gilenya (fingolimod)—antineoplastic and immunomodulating agents—were approved a while ago (March 2011), they are the most recent drugs approved and launched in all those markets. Sycrest (asenapine)—indicated in bipolar disorder—ranks third and was approved almost two years ago in September 2010.

The fact that time to market is longer in countries where official and often complex pricing procedures are in place explains why a limited number of drugs are available everywhere. With long pricing procedures for drugs in France, Italy, and Spain, drugs approved by EMA are commonly launched in those markets at a later stage —usually at a minimum of one year after marketing approval—while in Germany and the United Kingdom time to markets are faster—only several months. This is the reason approximately one third of the 125 drugs included in our sample is available in France and Italy while around 50% to 60% is already available in Germany and the United Kingdom.

Market Availability for a Sample of 125 Innovative Drugs Approved by EMA between August 2009 and April 2012 Source: POLI, 2012

Price Differential in the Top-5 European Pharmaceutical Markets
We also looked at price differentials (in terms of manufacturer prices) for ten innovative drugs approved by EMA between those five countries. Results demonstrated that overall, drug prices are the highest in Germany (prices were the highest for seven out of the 10 cases studied) while they tend to be lower in Italy or the United Kingdom (prices were the lowest in 3 and 4 cases, respectively).

Ten Innovative Drugs Samples—Summary of Number of Cases Where Prices are the Highest or the Lowest Source: POLI, 2012

Additionally, the drug price differential between those countries are quite large. In six out of the ten cases studied, prices are at least 20% below that of the most expensive drug. The drug Sycrest (asenapine) was included in the sample and demonstrates this trend: its price in Spain is at least 45% below that in Germany. In turn, the price in the United Kingdom is 14% lower than in Spain. Those price differences enable pharmaceutical companies to implement launching strategies in an attempt to maximise profit.

Impact of German Pricing Procedure
Under the AMNOG pricing procedure, new drugs launched, initially freely priced by pharmaceutical companies, are assessed by the Germany's G-BA, which determines the added benefit of the drugs. Prices of those drugs demonstrating an added benefit are consequently negotiated between the statutory insurance system (Gesetzliche Krankenversicherung—GKV) and pharmaceutical companies. However, prices of drugs failing to provide evidence of an added benefit are not to be negotiated. In this case, the maximum level of reimbursement is set instead.

This pricing procedure has already had an impact on market access, with several pharmaceutical companies withdrawing or not launching their drugs after the G-BA’s early assessment. However, it hasn’t had an impact on drug prices, as only drugs positively assessed, and therefore very likely to get a premium price, remain on the market. However, as certain drugs will no longer be available, due to cost, prices might indirectly drop in countries using Germany as a reference country. However, the impact should be limited as, aside from France, most countries use the lowest prices abroad and consequently already exclude Germany.

About The Author

Floriane Reinaud is a principal analyst at IHS Life Sciences Practice. She is responsible for a global pharmaceutical pricing database and has developed in-depth knowledge and experience of P&R policies, market access strategies, and specialist topics, including orphan drugs and biosimilars.